Case Study: Rick and Sara – Selling a House With Solar Panels

There is a common misconception out there that selling a house with solar panels is more difficult than selling one without them. There is another misconception out there that adding solar panels will automatically make it easier to sell your home, add a few percentage points to the selling price and make your home sell a lot faster.

If those two statements seem to contradict each other, you might want to home in on the key word: automatically.

Yes, solar panels can add value to your home, but you can’t just wait for a flood of would-be buyers to jump into a bidding war so they can get their power-hungry hands on your cheap source of electricity.

Expecting everyone who views your home to fully grasp the benefits of the solar panels you installed is unrealistic, especially since there have been many different companies that could have performed the installation, as well as many solar programs over the years.

You or your Realtor will have to do some work to make sure that all prospective buyers fully understand what the panels actually do for the home, as well as what steps need to be taken to ensure a smooth transfer to the Buyer. 

Rick and Sara recently put their house in Centerville on the market and, since Rick knows a thing or two about solar, he put together a nifty document that explains all the benefits of solar, not just in general terms, but in terms that are specific to the house he’s trying to sell.

It’s a case study in what you need to do if you really want to maximize the return on your solar  investment when it comes time to sell your home. So let’s dig into it.

How Much Power the System Produces

It just so happened that Rick and Sara put their house on the market in February. That was handy because he was able to take the entire previous calendar year’s production and use that for his demonstration. But if you’re selling in, say, August, you can just as easily take the most recent 12 month period as your sample size.

“I got my system from Sunrun so I was able to log into the MySunrun app, and see at a glance exactly how much power my system had generated the previous year,” Rick explains. “Better yet, I was able to take a screenshot directly from my phone and use it in the document as proof of just how much electricity the system had produced.”

Many solar companies besides Sunrun offer similar apps although, if your system was installed a long time ago, you may not be aware of it. Check if the company who installed your system has an app or other online portal that you can log into and check production. Or, if you signed up for a PPA you should get a monthly statement that you can use to monitor annual production.

Using his app, Rick was able to demonstrate to all prospective buyers that, in the twelve months prior to putting his house on the market, his solar panels had produced 9,141 kWh of electricity.

How Much Money is the System Saving?

Once he had figured out how much electricity his system was producing, it was pretty simple for Rick to calculate how much money it saved.

Short-Term Savings

“I know that the current Eversource rate is 35 cents/kWh,” said Rick, “and that I’m paying 15 cents/kWh on my Sunrun PPA. So if I multiply that 20 cents/kWh difference by the annual production of 9,141 kWh I get around $2,000 per year in savings.”

Rick’s case was further enhanced by the fact that he had signed up for a PPA that had no accelerator. Most PPA and lease agreements come with a provision that the per-kWh rate will increase, usually by about 3%, for each year of the agreement.  

On Cape Cod, that still works out to be a great deal compared to the 7%-10% rate increase you can realistically expect from Eversource. 

But these accelerators can be negotiated away and, perhaps in exchange for a higher initial rate, you can sign a PPA that never increases for the entire term of the agreement. 

That allowed Rick to make an even more compelling case to would-be buyers about the long-term savings of his solar system.

Long-Term Savings

Eversource rates on Cape Cod have increased by an average of 7% per year over the last 20 years, and many experts expect that rate of increase to grow over the next 20. But Rick preferred to take a conservative view and estimate future savings based on a range of 4% to 7% rate increase.

“By comparing the 4% or 7% that Eversource rates are expected to increase with the 0% that is locked into our Sunrun PPA, I was able to estimate that the solar panels on our roof would potentially save anywhere from $19,000 to $24,000 over the next ten years, and anywhere from $62,000 to $100,000 over the remaining term of the agreement.”

Naturally, Rick explained that these were good-faith estimates and not a guarantee of future savings, but nontheless, these are compelling numbers that anyone who is planning to stay in a house long-term would likely consider a strong selling point. Rick adds,  “None of us know exactly what Eversource will be charging in the year 2044, but I know that this home will still be paying 15 cents/kWh. That’s pretty amazing.”

If You Purchased Your System

Naturally, if you purchased your system outright, the calculations would be different. You still take the prevailing Eversource rate of 35 cents/kWh, but you now compare it to the zero cents/kWh hour you’re now paying. Savings are even greater and the selling point even stronger.
If you purchased the system with a solar loan, things get a little more complicated, and probably beyond the scope of this case study. Check out Tips on Selling a House With Solar Panels for more information on that.

Explain the Contract

PPA contracts are lengthy documents, filled with pages of legalese and other intimidating language. So printing out the contract and presenting it to every would-be buyer probably isn’t the best idea, but having it available to anyone who makes a firm offer is essential. 

For his preliminary document, though, Rick prepared a one-page explanation of the key points.

• Length of term
• What’s covered in terms of maintenance, parts and labor
• Insurance
• Production guarantee
• Monthly cost
• How easy it is to transfer

“I wanted to present the benefits of solar in a way that would take away any preconceived misgivings a buyer might have,” Rick said. ”There’s a lot of misinformation out there about solar in general and solar PPAs in particular. I wanted to get out ahead of anything would-be buyers might hear from friends or family members they may later talk to about buying a house with solar.”

This is about giving the would-be home buyer a clear, accurate picture of how this really works and what to expect; ammunition that they can use to counter any arguments that they might get from that “know-it-all” friend who thinks solar is a bad idea. Just one solar detractor can be enough to put a potential buyer off the idea of making an offer for your home.

Explain the Transfer Process

Rick determined that it was not enough to just sell prospective buyers on the benefits of solar but also overcome any hesitancy they may feel about the transfer of the PPA to the new homeowners. 

Some companies make this process more cumbersome than it needs to be. Sunrun makes it super easy, so much so that Rick felt that it was a selling point in itself. So he put together a simple Property Transfer Checklist that showed just how simple the process was. There were just four items on it.

Final Thoughts on Selling a House With Solar Panels

Not everyone is going to want to buy a house with solar panels, and that’s okay. That number is shrinking as panels become more common and as electricity rates continue to rise. But the most important lesson to take away from Rick and Sara’s case study is that, even people who like the idea of solar, still need to be sold on its benefits.

Buying a house is a big deal, particularly for any first time buyers that are most likely to be shopping for their home. It’s the sort of decision that buyers are going to discuss with other parties – friends, family members, neighbors, etc. It just takes one or two of those people to throw cold water on the idea of buying a home with solar.

You and your Realtor need to equip your prospective buyer with clear facts and counter-arguments to help them to make the case for solar, in their own minds as well as in the minds of solar’s detractors.

If you are selling your solar home and would like us to put together a similar solar assessment for you, feel free to contact us to set up a time to chat.

Massachusetts Solar Financing – Back to Home